If the investment has been held for at least two years before death, the investment should, in most cases, obtain full relief from Inheritance Tax and with the other benefits of the EIS, the effective cost of investment may be reduced to zero.

Example

Initial Investment

£50,000

Less income tax relief at 20%

£(10,000)

Capital Gains Tax Deferral

£(20,000)

IHT relief @ 40%

£(20,000)

Net cost of investment

£0

IHT Relief - assuming the investment is worth £50,000 at the date of death. If it is worth more, the IHT relief would be obtained at up to 40% of the value.